Artificial intelligence (AI) is a rapidly advancing industry in the Baltic states of Estonia, Latvia, and Lithuania, with a growing number of companies now focused on building AI-native products, rather than simply enhancing existing offerings with AI, according to a new report by Riga-based management consultancy Venture Faculty, in collaboration with Dealroom.
The report, released in June, explores the growth of the AI sector in the Baltic region, offering a comprehensive mapping and analysis of AI-powered companies based in the Baltic states.
It notes that the Baltics is now home to 184 AI companies, with the majority of them (52.7%) offering AI as a core product. A smaller share (32%) provide AI-enabled solutions, while only a small fraction fall into categories where AI plays a supporting role: AI-enhanced (4.9%) and AI product extensions (2.2%). This distribution suggests a regional trend toward using AI as a foundational technology, rather than a feature layered onto existing products.
When looking at company formation, the report notes a peak of 39 new AI ventures in 2023, and continued momentum in 2024, which saw 20 new startups.
It also emphasizes that older companies founded before 2020 tend to integrate AI into existing products and services, indicating a motivation to modernize their product offerings. In contrast, younger companies founded afterwards are more likely to build AI-centric products and explore novel applications.
Country-level AI trends
According to the report, Estonia has the largest AI sector, leading the region with 76 AI companies (41.%). Estonia is followed by Latvia with 67 (36.4%) and Lithuania with 41 (22.3%).
It notes that each Baltic states shows distinct area of AI specialization. Latvia, for example, is gaining momentum in using AI in sales and marketing, and software and AI research and development (R&D), facilitated by robust digital infrastructure and active public-private collaboration.
Estonia, meanwhile, stands out in logistics and mobility, healthcare and biotech, as well as AI infrastructure and devtools. The country’s leadership in these areas stems from long-term long-term investment in digital infrastructure and smart transport systems, such as Tallinn’s Digital Transport Model and national ITS solutions.
In AI-driven fintech, Estonia and Latvia are leading the region. Notable companies in this category include Raison, an AI platform for investment and personal finance, and Depowise, an investment compliance monitoring software, both from Estonia; as well as ClearPic SIA, a compliance-screening platform from Latvia.
Finally, Lithuania leads in edtech and creative AI, as well as defense tech. The country also has many companies in the sales and marketing category, supported by its national AI strategy focused on digital skills and innovation in education. Companies like Turing College, an Y Combinator-backed startup from Vilnius, exemplify this trend through AI-based online learning programs.
Europe’s expanding AI ecosystem
AI is gaining momentum in Europe, which now ranks third globally in terms of AI stakeholders, accounting for 20.4% of global players, or 9,110 organizations, according to the European Commission (EC). Europe only trails behind the US and China, with 13,762 and 11,381 AI stakeholders, respectively.
In 2024, Europe’s AI companies raised US$13.5 billion, marking a 22% increase in capital invested year-over-year (YoY), according Silicon Valley Bank, citing Pitchbook data. The UK led the region, securing nearly US$6 billion, followed by France at US$3.2 billion and Germany at US$2 billion.
Europe’s booming AI sector is supported by the region’s strong talent base, fueled by top-tier engineering schools such as France’s École Polytechnique, which has produced a high number founders behind major AI ventures like Hugging Face, InstaDeep, and Mistral.
Leading universities including the University of Oxford, the University of Cambridge, the University College of London Imperial College London, and the University of Edinburgh, are also well-known for their cutting-edge research in AI and machine learning (ML), and deep industry collaborations with the industry through initiatives like the Alan Turing Institute and Google DeepMind.
Another driver of this growth is the rising adoption of AI. According to Eurostat, the statistical office of the European Union (EU), 13.48% of EU enterprises used AI in 2024, up 5.48 points from 2023. The Nordic region saw the largest increases, with AI use increasing 14.72 points in Sweden, 12.41 points in Denmark, and 11.6 points in Norway.
Looking ahead, the sector is poised for further expansion, driven by supportive initiatives. In February 2025, EC President Ursula von der Leyen launched InvestAI, an initiative to mobilize EUR 200 billion for investment in AI.
A key component is a EUR 20 billion fund dedicated to building four AI gigafactories with around 100 000 latest-generation AI chips to train complex, very large, AI models. These facilities will give broad access to computing power, enabling even smaller companies and researchers to develop advanced AI systems.
Featured image: Edited by Fintech News Baltic, based on image by thanyakij-12 via Freepik
